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From a newsgroup post: "I started getting this error for user "NT AUTHORITY\NETWORK SERVICE" after I installed the .NET Framework version 3.0 on a new SBS 2003 R2 server. In the same time I was getting event id 1000 source from Windows SharePoint Services 2.0. After a few restarts both errors dissapeared".
The "Login failed for user <xx>" link provides an example of a situation when this error occurs if a user attempts to login to SQL using the osql.exe utility.